Biofuel markets are being driven by several broad forces most notably the rising price of crude oil, national security issues, and environmental concerns. Biofuels hold the potential to significantly reduce the reliance on imported fossil fuels while reducing greenhouse gas emissions.  In the United States and Europe, increasing demand for alternative fuels and government mandates, have led to the rapid increase in the production and use of biofuels.

United States Biofuel Markets

Specific measures mandated by the U.S. government to deal with these issues include the passage of the increase to the Renewable Fuels Standards in 2007 and the phase-out of MTBE (a gasoline oxygenate shown to contaminate groundwater and cause cancer).

The Renewable Fuels Standard (RFS) was part of the Energy Independence and Security Act of 2007 and sets annual requirements for the amount of renewable fuels produced and used in motor vehicles. Under the bill, the RFS requires 9 billion gallons of renewable fuels in 2008 and progressively increases to a 36 billion gallon requirement by 2022. Beginning in 2016, an increasing portion of renewable fuels must be advanced biofuels, such as cellulosic ethanol, starting at 3 billion gallons in 2016 and increasing to 21 billion gallons in 2022.

European Union Biofuel Markets

In December 2008, the European Parliament approved the 20-20-20 plan that calls for a 20 percent cut in greenhouse gas emissions from 1990 levels, a 20 percent increase in the use of renewable energy, and a 20 percent cut in energy consumption through improved energy efficiency by 2020.  The 20-20-20 plan also established a mandatory goal for 10 percent of all transportation fuels to come from renewable sources such as biofuels.  This replaced a voluntary 5.75 percent target by the EU which was implemented with varying success by member states through different state specific policies.